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In this part of our series, OnlineFileTaxes will look at what happens if you don’t file the 1099′s on time.

The first thing to remember is the date for filing – if you are a business that has generated 1099′s, you must file them by February 28th 2012 or April 1st, 2013 depending on whether you are filing on paper or electronically. If filling by paper you would use the first date, February 28, 2012.

If you are a larger company and have generated over 250 1099 forms, you must file them electronically – the federal government does not give you any choice about that.

The good news is, it is very easy to get an extension to filing the forms, and you don’t need a reason to be late. Also, since you are reporting money that was paid out you do not have to send any money if you are getting an extension, unlike filing an extension on your tax filings.

Remember, the extension must be filed on or before the date that the 1099 forms are due. Penalties begin at $30/form if filed late and can rise to as much as $100/form, depending on exactly when they are filed. Depending on how many forms you have to file, this could easily get quite expensive.

The penalties are arranged so that the amounts go up per form depending on how late you are filing. To file an extension use form 8809, whether on paper or electronically. This will extend the deadline by 30 days, and another extension may be filed under certain conditions.

From the first 30 days of the due date (or the date the extension runs out) the penalty is $30.00/form. The next step is $60.00. This is for forms which are filed more than 30 days after the due date but before August 1st, 2013.

After August 1, 2013 the penalty increases to $100.00/form which is late. This penalty is also the same for not filing them at all. The maximum penalty that can be levied against small businesses is $500,000. Keep in mind, a small business by government definition is any business which has less than $5 million in business (average gross receipts) for the three years previous.

For a person with one or two 1099 forms, the penalties are not very egregious but it is easy to see how quickly they can mount up if you are a larger company that routinely pays workers and contractors using a 1099 form.

For individuals, the form is just a way of keeping track of income, so the penalties would come in on the general tax return. For instance, if you don’t report a 1099 to try to report less income the problem won’t be that you failed to report the 1099, it will be that you failed to report income. This is much worse than the business which simply forgets to mail the forms out in time.

If you are a business and the worst has happened, such as fire, flood, computer meltdown or if some other misadventure occurs the IRS is quite good at working with the company.

The important thing to remember is to talk to the IRS about any situation in which the forms are going to be late or if the record of them have been destroyed.